Telephone Books — The Indispensable Tool in the Recycling Bin

Last week I heard a “thump” against my front door… when I looked, it was a phone book which had been thrown on my porch.  It wasn’t a big phone book — you know those separate white pages book and one for the yellow pages.

I remember the first thing I’d do when the new book came out, was to quickly scroll to my name and make sure I was listed and the address and phone number were correct.  But when I brought the phone book in, I promptly threw it in the recycling bin.

So the phone book has gone the way of so many other “analog” properties.  Having been chased out of business from the 1 and 0’s of digital.  The phone book has been converted to digital… but, you can find out so much more than just a name, address and phone number by typing your name in a search engine.  Plus, you can find out everything from criminal records to legal documents…

How the world has changed… but sometimes I yearn for the days of thumbing through a phone book to see my name in print.

Scott

Marketing is Sales — Learn to Live With It

As Marketers we continually screw ourselves every time we open our mouths and spout out… the brand, advertising, radio, tv, print, events, digital, creative, marketing “expense”, media, etc.

All of those terms scream — Expense!  It reinforces the misconception that all marketing is expense… and people outside of Marketing (e.g. Finance/Sales, etc.) keep thinking “why do we spend so much money on this fluff.”    

Whether we like it or not, we Marketers have branded our work expense.  So every time the company needs to cut expenses… the Marketing budget is the first stop.  And the self fulfilling prophecy of cutting the budget which decreases the effectiveness/metrics gives critics more ammunition that Marketing just does “stuff”.

Learn to live with it folks… Marketing is Sales!  Yes, we are Sales People.  Damn it, we’re in Sales!  Why??  Every single dollar spend on Marketing should drive sales.  Think about it… why would Company Executive, Board of Directors and Shareholders support the expenses associated with Marketing.  Because they expect… no demand… that sales will be positively impacted by the expense.  

Marketing Research

Advertising

Creative

Media — TV, Digital, etc.

Direct Mail

Database Marketing

Marketing Operations

Technology

Web Sites

Headcount 

And the list goes on and on…

We must change the language first… we need to add the word “sales” into our vernacular.  

Sales drive by advertising

Sales Web Site

eCommerce

Web leads

Demand generation sales

Advertising sales / lead generation

Sales customer research

Events which drive sales leads

Sales metrics

The change in language starts to change the way our budgets are looked at.  Now we can start dialog around cutting budget cuts sales.  Finance and executives will now be forced to reconcile budget cuts on sales drivers vs. marketing expenses.  It’s a hell of lot easier talking about how those budget cuts will impact sales vs. how GRPs or brand awareness will be impacted.

Scott 

Agency Rebate Allegations – “RebateGate”

In the October 20^th issue of Advertising Age, it was reported that the ANA and the AAAA’s have come together to investigate allegations of “agency rebates.” 

Basically, the situation(s) is this:

-          Media agencies purchase media on behalf of multiple clients.

-          Media companies have allegedly provided incentives to agencies for buying more inventory from       them.

-          The agency then received a “rebate” for spending more money with one media-company.

-          Rebates haven’t been passed back to clients but pocketed by the agency.

-          Clients have been kept in the dark for the most part regarding this practice.

This isn’t anything new… it’s been going on for years.  Media audit companies have been pointing it out to clients for a number of years.  And savvy large advertisers have been able to claw those dollars back.

The rebate situation brings up:

1.       Transparency – why haven’t clients been informed of these rebates by media companies and others?

2.       Trust – if the “value” of a media agency is to strategize, plan, measure and frankly buy media at the lowest possible cost for clients… how do I know they’ve been purchasing the right media for my campaigns? 

3.       Motivation – is the agency motivated to meet my needs or thinking about how they can make the rebate?  And, have those fees helped make up the delta for lower costs on media buying fees paid to the agency?

So what to do?

1.       Ask the question of your agency – Are you receiving any rebates from any media partners, vendors etc. for the work you do on behalf of my company?

2.       Hire a media audit company to look at the media and vendor purchases… audit the numbers and report back on rebates and other financial concerns.  Hopefully, a clause such as this is included in your agency contract.

3.       If rebates are found, have the amount calculated by a 3^rd party.

4.       Ask for a rebate check, not media credits or agency fee credits.  A check makes this a clean transaction, getting media or fee credits will just make things more complicated.

5.       Current agency fees – make sure you keep an eye on any additional fees which might start being applied to your bill.  This could be to make up for any media rebates which might be taken way.

6.       Future Negotiations – when you look at negotiating for a new term (or with a new vendor/agency) make sure you understand if fees are going up because rebates might be taken away.

7.       Quarterly Review – if you don’t already do it… start a review to keep this and other potential issues in the windshield vs the rear view mirror.

8.       Provide very clear contractual language on rebates, etc. in your agency contract

9.       Make it known to media companies your input on this situation.  It’s your money the media company gets… so they will listen.  As my Dad would say you need to have a “come to Jesus” conversation with them.

10.   Follow the Money – this is a simple situation to follow who’s getting the cash and why.  Start investigating.  Don’t stop with the agencies … look at media companies as well.

If agencies aren’t transparent with clients… it will eventually come out.  It might take some time…you can run, but you can’t hide.  And if this investigation yields specific names as to company’s potentially involved in the rebate allegation… restoring trust of clients will be tough…and explaining this at pitches is going to be interesting to say the least.

Getting in front of the Marketing community with your cocker spaniel named “Checkers”, getting on TV and saying “I am not a crook” or getting rid of 18 minutes on tape… ain’t gonna work. 

Scott

iTunes Radio – The Great Cross Sell Platform

If you haven’t upgraded to the new iOS7 platform for your iPhone you’re in for a pleasant surprise – iTunes Radio.  As it’s similar to other internet radio platforms such as Pandora, etc. you would think it’s just another music streaming service…but alas, as you dig a bit deeper you’ll find iTunes Radio is the great cross sell platform.

What Apple’s done right with iTunes Radio

-          Access – it’s right there at the bottom of your music library where your playlist, artists, etc. is listed.  Easy to reach, easy to buy.

-          Features – easy navigation from the information graphic to an artist station, for the song, sharing the station (sharing also equals cross selling), ability allow (or not) explicit tracks.

-          Cross Sell – not only is the $1.29 buy button in it’s same graphic and placement you’re use to it… the announcer comes in very naturally/in no way obtrusive and briefly mentions a track you might want to download.

-          Individuality – the ability to “tune” the station from Hits to Variety to Discovery I found great.  If I wanted to hear the familiar – I kept it on the Hits, if I was in a more inquisitive mood I’d tune it to Discovery – more opportunity to Cross Sell. 

-          Clarity – reception via wifi was fine… but 4G seems to stutter a bit.

-          Fresh Music – although the music is probably the same as in my iTunes library, iTunes Radio creates a new playlist of music I normally wouldn’t listen too but fits the category.  And that becomes addictive… to the point, where I’ve downloaded 3 songs which I hadn’t heard for years – again Cross Sell!  And that data about my purchasing history is surely getting mashed up for additional cross sell opportunities in the future.

-          Integration – as all my music is on iTunes – buying integrates right into my catalog as you would expect it to…. keeping me from straying to another music service.

What Needs Improvement

-          Graphics – the same basic music genre has the same graphic images… It makes it tough for you to mental mind graph the music to an image.

-          UI – even after using it for a few days I keep stumbling with the UI trying to navigate my way around.

All marketers can learn another lesson from Apple.  This time, the lesson is subtle but just as powerful – sell horizontally and vertically.

Scott

Redesigning the Stop sign

Humerous -- at times you just have to sit back and laugh....

Scott

Gotcha’s When Hiring an Agency

• Overhead
• This is one of those “hidden” expenses which tend to slip through the cracks when discussing compensation with an agency.  Usually the cost per title/person is discussed and negotiated, but overhead is where the agency makes up or adds profit.  I’ve seen overhead, etc. 32-52% above the cost per person.  The question you should always ask is why am I paying for the electricity when they have a ton of clients…. How is that separated between clients?
• Bonuses
• Look I’m not beyond saying people shouldn’t get a bonus.  But make sure you understand how it’s calculated and the process associated with determining who gets what and the amount.  If it’s not coming out of what you’re paying per person, but the agency profit… they can do and should do what they want.
• Staffing
• Miss-aligned staffing is a big issue.  You have to decide the type of staff you want on the account.  But be wary of high dollar agency executives being billed on the account.  Are they adding value?  Or are they just pressing the flesh?  My starting goal has always been to have 40% on executive billings and the rest on lower level staffers – this way the agency gets off to a good start and transitions quickly.  Then over time, I like to move the percentage split to be 20-25% over one year for executive management and after one year approximately 15% with the rest being staffers. 
• Billing
• Media invoicing usually takes some time to consolidate and validate billing… with some taking 120 days to be completed.  However, having the agency NOT bill you for headcount or media on a consistent basis – or not calling out problems with billing is an issue.  Monthly you should get a list of invoices not paid and the date of the invoice.  If they don’t provide it, make sure you have agreement you won’t be responsible for invoices you haven’t been informed of after 1 year.
• Indemnity
• This is always the “big issue” in all the negotiations.  As clients we want to hold them responsible for everything, and agencies don’t want to be held accountable legally.
• My take – they should be responsible for the work product.  For example if an employee steals code from another company… the agency should take the hit.  However, if the client doesn’t do the appropriate trademark search when the agency wasn’t asked to do so… the client is responsible.
• Also, don’t get so hung up on this… use common sense.  Remember, your legal department is geared to limit as much risk as possible.
• Overstaffing
• Yes, the big issue… let’s get it out on the table.  It’s in the nature of most businesses to add staff to grow.  Frankly, I believe that’s the wrong strategy, especially with the agency.  You should work to decrease the number of staff by 2-7% per year… this forces you and the agency to get more efficient and eliminate non valuable projects or processes.
• Auditing
• You must have the ability to audit at anytime – period.  Naturally, you shouldn’t have access to individual employee’s records, but you should have the ability to look at time cards, etc. 
• It’s a good practice to audit every 18 months – even it’s just a spot audit.
• Also, hiring an audit company experienced in agency audits is a plus – they can ask the tough questions, take the heat with the agency, etc.  Make sure that’s included in the contract as well.
• Reviews
• Quarterly performance reviews are critical!!  Sitting down with the agency team and saying “what could we have all done better?”
• If you don’t do this on a continual basis, improvement won’t happen and you’ll quickly end up in a “blame the agency” situation.  And that usually ends up in an agency review.
• Non-Compete
• Ensure you have a minimum 6 month non-compete regardless of whether you or the agency discontinues the relationship.
• Media
• Consolidated media buying offers clients the benefits of reduced costs as their buys are integrated with other clients.  Here’s the rub… some media outlets will provide additional bonuses back to the media agency buying arm.  Some agencies pocket those bonuses themselves, when they should be split and given back to the client.  Make sure you get those extra media bonuses back in your pocket!
• Make Goods.  Ensure your contract includes the use of make goods prior to utilizing your media budget for the same property.   You’d be surprised how these can become a surprise.  

What a Drummer Can Teach Us About Business?

So that headline grabbed you.... if you look at other areas of the world you can see bits of brilliance which can be transferred to marketing.  Take for instance Fede Rabaquino -- a drummer from Europe.

If you check out his video channel, you'll see he takes current or old songs and adds his own "drumming flavor" to each song.  Not only does is change the way you experience the song, but in my opinion makes the songs sound fresh -- in otherwards, utilize what's already worked and just put a new spin on it.

In an age of business budget constraints, pressure on margins, etc.   Why do we insist on coming up with a "new" campaign or initiative everytime?  Why not be like Fede and look at the work from a different perspective...

Enjoy his latest video.... a new take on AC/DC's "You Shook Me All Night Long"

Scott

What Kind of Business Should You Strive to Be?

It’s questionable today whether the economy is actually getting better.  But regardless, one thing I was taught was how you should focus your business for not only the short but long term. 

Good Companies -- cut costs

Great Companies -- cut costs AND increase gross revenue AT the same time

Outstanding Companies -- cut costs AND increase gross revenue AT the same time AND CONTIOUSLY over time.

Which are you today?  And more importantly what kind of company do you want to be?

Scott

Are Our Metrics Focusing on the Right Things?

It seems like every other email newsletter I receive has articles regarding metrics about social, mobile, engagement, likes, content views, GRP’s and the like.  And I’m not disputing the point of each of these are important in their own universe…. And if you can connect them, all the better.

However, let’s go back to the fundamental reason for marketing.

“All marketing investments, across ALL areas/functions/businesses, etc. is to do one thing…SELL”

     

If the above weren’t true, why would the board of directors, management and shareholders agree to marketing budgets?  Marketing is a fundamental investment with both short and long-term financial goals.  Short-term – sell product immediately, drive leads for sales, increase eCommerce traffic…. Long-term – build the brand, create advocates for the brand, drive high value leads, increase price, etc.

Which brings me to my concern…it seems to me we’ve taken our eye off the ball on the metrics which truly matter and support the reason for marketing investments.  So what top-level investment metrics should we regain focus on?  My key ones include:       

1.  Incremental Gross/Net Revenue per total marketing dollars spent

2.  Customer Acquisition Cost

3.   Both #1 and #2 but revenue per marketing employee

4.  Customer Cross Sell Ratio

5.       Recency/Frequency/Monetary Value customer model – check out Don Libey’s extensive research on this model

6.       Customer Satisfaction Levels – get down to specific detail items you’re working on and track them consistently

7.       Customer Lifetime Value

8.       Marketing Investment Payback Time

9.       Customer Attrition Rate

10.   Customer Segmentation Model and Marketing Investment

Certainly, I have additional ones I could list, but keeping things simple--the above 10 help focus your investments, strategy and executions on the things which matter.  In addition, when the boss calls you in the office, you speak management language vs. the marketing babble.

Scott

What Does Bezos See in the Washington Post?

Why would the king of online buy an “old school” media property?  Everyone is scratching their heads – from Wallstreet to Ad Agencies. 

However, look deeper and you can begin to see opportunity:

1. The Washington Post is a household name after the Watergate Scandal – and that is relevant to the older demographics who value the journalism

2. The Post has tons of content – which the younger demographics (and many older demos) flock too.

3. Amazon has the distribution tool – The Kindle… which it has leveraged to drive digital book/content sales

You put those together and you get brand, content and distribution.  Revenue opportunities abound:  

-          white branded content to sell to others

-          firewalled and valuable content sales model

-          free content to drive the sales of more Kindles

-          cross sell opportunities – too many to even think of

-          potential to create advertising sales on Amazon.com company based stores

Bezos is brilliant.  Don’t underestimate this buy out.

Scott